Mumbai: The Indian stock market suffered significant losses across segments in the morning session on Thursday (July 31). In the opening hours, the benchmark Sensex crashed nearly 800 points and the Nifty 50 plunged below 24,650.
Around 11.30am, except FMCG, all other sectoral indices had been trading in the red with auto, IT, metal, consumer durables, capital goods, telecom, oil & gas down 0.5-2%.
Losers & gainers: Dr Reddy’s Labs, Adani Enterprises, Reliance Industries, Bharti Airtel, Hindalco Industries are among major losers on the Nifty, while gainers are Jio Financial, HUL, Eternal, Power Grid Corp, JSW Steel. BSE Midcap and smallcap indices down nearly 1% each.
Over ₹3 lakh crore loss: Investors lost over ₹3 lakh crore within the first 10 minutes from the opening bell. The overall market capitalisation of BSE-listed firms dropped to nearly ₹449 lakh crore from more than ₹452 lakh crore in the previous session.
Why is the Indian stock market falling?
According to experts, the following key factors are behind the stock market selloff:
- Trump’s India tariff
US President Donald Trump imposed a 25% tariff and a penalty on India for buying Russian oil, effective August 1. “The higher tariffs on India versus expectations could potentially weigh on capital flows. FII flows have now become critical in shaping market outcomes amid heavy promoter selling and slowing DII flows. The direct impact is likely to be on stocks/sectors where the US sets the marginal price –pharma, auto ancillaries, a few industrials, cables and wires, tiles, etc.,” Nuvama Institutional Equities told the Mint.
- No indication suggesting rate cuts by Fed
There is a lack of hints from the US Fed on rate cuts in the coming months.
The US Federal Reserve maintained the federal funds rate in the range of 4.25% to 4.50% on expected lines. But it did not give any clear signal that rate cuts may begin any time soon. “It may take more than one or two quarters—possibly even longer—before the Fed begins easing. Over the past two months, tariffs have been on the rise, and their impact is expected to come with a lag. The September–October period will be crucial to observe how these tariffs affect US inflation,” said G Chokkalingam, the founder and head of research at Equinomics Research Private Limited, told Mint.
- FPIs selling Indian stocks
Massive foreign capital outflows have been one of the main reasons behind the downtrend.
Foreign portfolio investors (FPIs) have sold Indian equities worth over ₹42,000 crore in the cash segment in July so far (till July 30), reported the Mint.
FPIs have been selling Indian stocks as the market valuation is stretched. The rupee has weakened, and earnings have remained soft.
